HR technology: Everything you need to know for 2023
HR technology: Everything you need to know for 2023
If you’re a human resources professional and feel like each day is an uphill battle, you’re not alone. Across all industries, HR teams are facing historic headwinds. Fortunately, the right HR technology solutions can help overcome challenges and empower greater engagement, collaboration and efficiency.
At this year’s HR Technology Conference, we heard from hundreds of HR professionals. They shared their perspectives on HR technology trends, professional development and predictions for next year. In this blog, we’ll share what we learned and everything you need to know about HR technology trends for 2023.
We’ll start with a quick definition of HR technology and a breakdown of different types of solutions. Next, we’ll share the top challenges facing HR teams as well as HR technology trend predictions for 2023. Finally, we’ll offer tips for selecting the best HR technology for your organization and RFP examples to help you get started.
Like technology in other industries, human resources tech spans a wide range of functions and use cases. To ensure we’re on the same page, we’ll start by defining HR technology and provide a list of HR technology examples.
What is HR technology?
HR technology is the software and hardware used to manage human resources objectives, tasks and duties. For example, common HR technology includes payroll, benefits and recruitment tools.
While your HR team probably routinely uses general business software like G-Suite, Office 365, Slack and so on to perform HR tasks, HR technology is designed to specifically solve challenges unique to people operations.
In recent years, the HR technology landscape has grown exponentially. In part, the wealth of options is due to the ever-increasing accessibility of cloud-based solutions. These software as a service (SaaS) solutions appeal to HR teams because they are affordable, quickly deployed and deliver value-added enhancements frequently. Additionally, the increase in HR technology solutions and adoption stems from the rapid and undeniable shift to remote work.
The HR technology landscape
The HR technology market is packed with tools designed to improve efficiency, automate processes and gather information. In fact, according to Greenfield Partners, a technology investment firm, investment in HR tech reached an all-time high topping $12.5 billion in 2021. The firm created an HR tech market map featuring a sampling of startups, enterprise organizations and traditional technology providers in the sector. We saw this in person, at the HR Technology Conference, with 450 vendors in attendance.
Types of HR technology
As you can see, the solutions in the map above are separated into four main categories including talent acquisition, talent management, HR analytics and core HR. However, there are tools designed for nearly every need.
So, when you’re looking to solve a human resources challenge, the question shifts from “Is there software that could help?” to “How do I know which solution is the right one?” It’s an important question to ask. After all, picking the right HR technology has a wide-reaching impact.
As you might expect, HR technology trends focus on solving problems. In talking with HR professionals and industry experts, we hear four key concerns.
Almost universally, organizations are struggling with talent acquisition. Finding the right candidates, connecting with them, vetting them and securing a commitment is not only difficult, but it’s a long process. Indeed, the turnaround time from posting to onboarding is longer than ever. LinkedIn data shows that on average, the hiring process is now 47 days, compared to an average of 25 days in 2014. Consequently, that’s nearly four weeks of lost productivity and heavier workloads for roles impacted by the vacancy.
Nearly every day there’s a new story, survey or study about the ‘The Great Resignation’. Certainly, most organizations have been affected by higher than normal turnover in the last three years. Unfortunately, Gartner projects that it’s a trend that will continue through 2022 and likely longer.
Predictably, recruitment and retention go hand-in-hand. As companies seek to fill vacancies and lure in new employees, they make offers that include higher salaries, generous benefits, creative perks and unprecedented flexibility. Consequently, organizations must be more proactive than ever to deepen relationships, maintain morale and retain talent.
3. Remote work
No longer a novelty, remote, hybrid and flexible work are now the norm. Consequently, there’s been a shift in employee expectations, needs and priorities. Empowering, engaging and enabling a workforce dispersed across the country, continent or globe requires a new approach (and new technology).
4. Corporate responsibility
When it comes to corporate responsibility, there are two acronyms you need to be familiar with: DEI and ESG. DEI stands for diversity, equity and inclusion. And, ESG is environmental, social and governance.
Increasingly, these issues are at the center of an organization’s reputation. HR teams face internal mandates to implement, report on and improve DEI and ESG initiatives. At the same time, candidates prioritize these issues when considering which company they want to work for.
HR technology trends for 2023
Naturally, HR technology trends evolve as organizational goals change. As you explore new technology, issue HR RFPs and select vendors, keep these priorities in mind to ensure adoption, efficiency and a positive return on investment.
We heard a lot at the HR Technology Conference about user experience (and for good reason). Ultimately, the end-user determines the success or failure of the solution. Consequently, it’s crucial to evaluate technology with this in mind.
So, who is the user? HR software users are either members of the HR team or employees (sometimes both). For example, typically, HR professionals are the only users of payroll software. While employees are the users of a training and development solution. And, both groups use benefits administration software.
What each user group wants and needs from a solution will be different. While a tool may have excellent data gathering and reporting, if you can’t get people to use it, it won’t matter. Employee users need tools that are intuitively easy, attractive and helpful. A solution that’s buggy, difficult to navigate or dated, means you’ll spend your time troubleshooting issues and correcting people who work around it. So, save yourself time by making user experience a must have.
Suite vs. stack
In HR, there are two approaches to technology: investing in an all-in-one suite or creating your own technology stack. Naturally, there are merits (and drawbacks) to both approaches.
Suites tend to have tools that address a wide range of needs. For example, Oracle is one of the best-known HR platforms and offers tools for talent management, payroll, recruiting, employee self-service, training and more. This means your HR team and employees only need to learn one system and one login. However, because of the number of tools included, these platforms are often expensive and certain tools may have limited customizability, provide rudimentary functionality or go unused altogether.
The alternative approach, and growing HR technology trend, is to build your own customized stack. This means selecting individual solutions based on your unique needs. While it requires more legwork on the front end, it often delivers a higher return on investment because you only pay for the solutions you need. Additionally, these point solutions tend to be more thoughtfully designed, frequently updated and simple to implement.
Data and analytics
Whether you know it or not, your HR team manages data already. What makes this an HR technology trend worth paying attention to is the potential that data has to help you make decisions, optimize processes and plan for the future.
Indeed, one of the biggest benefits of adopting HR technology is the ability to gather, standardize and analyze information. Every HR software provider understands the inherent value of data. Consequently, most offer powerful reporting, visualization and analysis tools. In addition, nearly every software application features some ability to export data so it can be used in conjunction with other systems.
Data and integration go hand in hand. If your systems are siloed, the usefulness of your data is limited. Additionally, technology integration is a huge factor in overall efficiency. For example, if an employee receives a promotion, their title needs to be updated across many systems.
With the right integrations, you can reduce the manual effort required to ensure the information is accurate in all systems. Indeed, a report from NetChex indicates that 60 percent of companies use five or more HR systems and HR professionals spend 512 hours annually maintaining them. Bottom line? If efficiency is a priority for your team, integration should be too.
Automation and AI
This is the HR technology trend that keeps on coming back. Year after year, automation and AI are central talking points, yet adoption is limited. Indeed, for the most part, HR teams are still performing the same monotonous, manual tasks the same way they always have. And, while progress is slow, the potential is limitless.
Various studies of HR technology illustrate the real-life value of automation and AI:
Automation and AI deliver value and empower HR professionals to focus on more strategic work. So, why are you waiting to save time? Surely you have better things to do than verify information and fill out forms.
Best practices for buying HR technology
HR technology is powerful, but it’s also an investment. With so many options, finding the right solution can feel overwhelming. For many organizations, the best way to explore and compare options is by issuing a request for proposal (RFP).
Designed to help organizations make data-based, objective, auditable business decisions, the RFP process makes gathering vendor information and comparing options easy. In addition, RFPs provide prospective vendors with details about your company’s background, needs and goals — so each proposal is tailored to your needs.
Essentially, the RFP process ensures that you have all the information you need to pick the best possible HR technology at the most competitive price with the lowest risk to your organization. Traditionally, RFPs have been created and managed manually. But now, HR teams are increasingly relying on RFP management software to streamline, centralize and automate the process.
Whether you issue your RFP manually using email or through an RFP tool, there are a few best practices to keep in mind.
HR RFP best practices
Connect with stakeholders
Before you write an RFP, talk with colleagues who can provide unique perspectives. These stakeholders should include prospective power users, department heads, IT and legal. Ask each role questions like: What features would you find most useful? Do you know of any solutions that might work? What does the current process look like and how can it be better? Who else would be impacted if we implemented a new solution? Use the resulting information to inform your RFP questions, write RFP requirements and set your project scope.
Define your scope (and stick to it)
One of the best things about cloud-based software is the quick development and release of updates and enhancements. Unfortunately, that means that new, flashy features can (understandably) complicate your RFP scoring. When evaluating solutions, remember that you’re looking for the very best solution to a singular, well-defined problem, everything else is secondary. Don’t let yourself get distracted by cool features, future use cases or other functionality that doesn’t directly help solve the issue immediately at hand.
Carefully customize your RFP template
Anyone who issues RFPs can tell you — RFP examples and templates are absolutely essential to efficiency and consistency. They give you a huge head start and help guide your process. However, a poorly updated RFP template is a huge red flag to vendors. Indeed, nothing discourages participation quite like irrelevant questions, deadlines that have already passed and inaccurate information. Trust us, taking your time is worth it. Update, tweak, customize and edit liberally to ensure your RFP is highly-focused, researched and relevant.
Use weighted scoring
While RFPs ask a lot of questions, not all of them are equally important. For example, your RFP probably contains some standard questions about a vendor’s company structure, background and history. While the answers may (or may not) be interesting, they likely won’t have a tremendous impact on your decision. To prioritize the most important sections and questions, use RFP weighted scoring. The approach gives assorted weights to different elements of the proposal and ensures that proposal scores more accurately represent the vendor’s ability to meet your unique needs.
When it comes to HR software, there’s no substitute for seeing it in action. After you’ve narrowed your options to a shortlist, schedule a demo with each and ensure all of your decision-making stakeholders attend. Because HR technology purchases tend to be high-value and high-impact, they require sign off from at least one executive. By including these decision makers in the demo process, you can expedite the final decision, contract and implementation timelines.
Sample HR software RFPs
Because the RFP process is so common, there are plenty of HR RFP examples to draw inspiration from. Here’s a sample list of some of the most common HR software RFPs.
Ultimately, HR technology can be innovative and exciting, but it can also be intimidating. Hopefully, you’re encouraged by the fact that you’re not alone and there’s technology that is ready to help, no matter what challenge you’re facing.
Remember, HR technology trends may come and go, but they always center around one goal — making HR professionals more efficient and effective. So, go explore your options. Talk with your peers. And, reach out to ask questions, because we’re all in this together.